Consider the Multifactor APT $\text { Portfolio }$ Assuming No Arbitrage Opportunities Exist, the Risk Premium on the F₁

question 24

Multiple Choice

Consider the multifactor APT. There are two independent economic factors, F₁ and F₂. The risk-free rate of return is 6%. The following information is available about two well-diversified portfolios: $\text { Portfolio }$ Assuming no arbitrage opportunities exist, the risk premium on the factor F₁ portfolio should be

• A) 3%.
• B) 4%.
• C) 5%.
• D) 6%.

---

Definitions:

Myelin Sheaths

Insulating layers that form around nerves, including those in the brain and spinal cord, which enable faster transmission of electrical impulses.

Sympathetic Nervous System

A part of the autonomic nervous system that activates the body's fight-or-flight response during perceived threats.

Parasympathetic Nervous System

Part of the autonomic nervous system responsible for conserving energy and promoting a state of calm and rest in the body.

Central Nervous System

The part of the nervous system consisting of the brain and spinal cord, responsible for processing and sending out neural signals.